So apparently I’m out of step with a consensus. A consensus Anthony defines around these words of Owen Barder’s:
Of course, every country should abolish all tariffs, quotas and subsidies, unilaterally and immediately, in their own interests as well as everyone else’s
I’m not so sure it is a consensus (unless Anthony just means a consensus among those who agree with him). Sure, most sensible commentators agree that the US, EU and other rich countries should open their markets, but to suggest that the same goes for every other country, no matter how poor, is nonsense. It’s widely recognised that different principles should apply to the poorest countries.
Why’s that? Well, ask a whole bunch of Third World farmers. Like it or not, a lot them currently...
Dan Drezner’s post here wasn’t written in response to my one on trade and development, but it might as well have been. Reading Stiglitz and Charlton’s Fair Trade For All, he concludes:
The problem with this argument is the same as the problem with Stiglitz’s Globalization and Its Discontents and Sachs’ An End to Poverty — they recognize that markets in the developing world lack vital infrastructure, but fail to recognize that developing governments suffer from even greater institutional deficits. Expecting these governments to determine when their proteted sectors should become unprotected from a welfare economic perspective is wishful thinking — in large part because these governments will not want to give up the rents that they extract from...
Whenever the guys over at the Globalisation Institute need an example of the inevitable catastrophe that awaits any country tempted to dabble in trade protection, they often turn to the example of India’s car industry. In December, Brian Mickelthwaite said the sector demonstrated
the futility of trying to build an internationally competitive industry behind high tariff barriers. Actually, as the Chennai car industry illustrates, if you want an internationally competitive industry, getting rid of the tariff barriers is where you start.
A week later, Alex Singleton pointed to an article on A World Connected, which compared the mediocrity of Hindustan Motors with the success of Japan’s Toyota and declared
While Toyota has competed on the global market, Hindustan Motors spent...
In “Trade Liberalization and Poverty Reduction in Sub-Saharan Africa“, Marian Tupy says
[Sub-Saharan Africa] continues to be one of the most protectionist regions in the world … Whereas average applied tariffs in high-income OECD countries fell from 23.7 percent to 3.9 percent between 1983 and 2003 (a reduction of 84 percent), average applied tariffs in SSA fell only from 22.1 percent to 17.7 percent (a reduction of 20 percent).
His source is this table from the World Bank. Scanning it, something struck me as odd: why did Tupy take 1983 as his base year, when there were only three Sub Saharan African countries reporting figures for that year, compared to nine in 1981 (the first year available)? There seems to be no good reason … but wait! If you take the average...
Writing in the Mail and Guardian Online, Fredrik Erixon and Razeen Sally argue that “Oxfam’s one-sided trade liberalisation is a policy of self-harm for developing countries in the WTO”. The evidence they put forward is as follows:
According to World Bank and Organisation for Economic Cooperation and Development (OECD) figures, since 1980 developing countries with a total population of about three billion — mostly in Asia — have more than doubled their trade-to-gross domestic product (GDP) ratios, doubled real per capita incomes and have cut average import tariffs by more than one-third. That leaves “less-globalised” developing countries with a combined population of about 1,5-billion, which have stagnant trade-to-GDP ratios and per capita incomes and much...
I was very sad to hear of the recent death of Hans Singer, but what a life he had! He received his doctorate in 1936 under Keynes after a recommendation from Schumpeter, and until a week before his death at ninety-five was still teaching. Having fled to Britain from Nazi Germany, his application for citizenship was supported by Keynes, William Beveridge, Archbishop Temple and the vice-chancellor of Manchester University (’overkill’, thought Singer) and, when interned in 1940, Keynes pressed for his release. He contributed to the war effort by researching the German economy, after which he worked for the Ministry of Town and Country Planning and then in New York for the United Nations, returning to Britain at 59 for a remarkably lengthy and productive tenure as a research...
In “What’s So Special About China’s Exports?“, Dani Rodrik argues that China has grown so fast in large part because it exports like a much richer country:
China is an outlier in terms of the overall sophistication of its exports: its export bundle is that of a country with an income per capita level three times higher than China’s. China has somehow managed to latch on to advanced, high-productivity products that one would not normally expect a poor, labor-abundant country like China to produce, let alone export.
This is significant because, here as in an earlier paper, Rodrik argues that higher export quality leads to higher growth. Most poor countries are stuck producing relatively low-productivity goods, because:
in a poor developing country, investors...
When Heather Stewart of the Observer describes the UK government’s enthusiasm for “the free-trade, high-growth model which has seen the Asian Tigers, China and India burst onto the global market place in the past 20 years”, she neglects to mention that while all of those countries have enjoyed high growth, none of them (unless you count Hong Kong) have used free trade. This is well-known to those familiar with the historical record, but apparently that doesn’t include the UK government or the Observer....
Dani Rodrik’s presentation from his November talk at the LSE is available here.
He makes quite a few good points, for example pointing out that the countries identified by the World Bank as “star globalizers” of the 1990s - China, India, Vietnam, and Uganda - seem to have thrived while ignoring the ‘rules’ of trade liberalisation ’suggested’ by the World Bank for structural adjustment in Latin America and Sub-Saharan Africa, two areas which broadly did not see anything like the same benefits. And he’s strong on how important domestic institutions are for development but also how diverse developmentally succesful institutions have been (China being an excellent example).
But I suppose the most interesting part is his “10 reforms...